La Arena hosts two types of mineralized deposits; one related to high-sulfidation epithermal Au, and the other related to porphyry environments Cu-Au (Mo). The former deposit is hosted by Chimu sandstones (Lower Cretaceous) while the latter by multiple intermediate intrusions with ages of about 24~25 Ma (Oligocene).

Both deposits are characterized by their typical alteration and mineralization occurrences as defined and described by Hedenquist, 1987 and Sillitoe, 2010. The epithermal deposit (currently being mined), is characterized by supergene oxidized high sulfidation mineralization, which occurs in fractured sandstones and hydrothermal breccia zones. The porphyry deposit (located towards the east at lower elevation), is dominated by primary Cu sulfides along with Au and poor Mo.

Four separate zones of breccias containing anomalous gold have been recognized around the western and northern margins of the La Arena Porphyry. They are known as Calaorco, Ethel, Astrid and San Andrés.

Epithermal gold mineralization currently being mined in the Calaorco Open Pit occurs partly in the Calaorco Breccia (located at the contact between well-fractured Chimu quartz sandstones and the overlying intrusive), partly within the un-brecciated but still well fractured sandstones, and partly within the intrusive along the contact. Located to the north of the Calaorco Breccia and open pit, the Ethel Breccia is a similar but smaller oxidized epithermal gold deposit.

Au mineralization is both lithologically and structural controlled, and occurs principally in silicified fractured sandstones and locally in hydrothermal breccias. Structural control is mainly associated to the principle Andean orientation (NW-SE) and secondary to tensional fracturing, as well as to bedding planes. Tensional fracturing has acted as a principal fluid channel way, containing oxidized high sulfidation epithermal Au mineralization. Fine grained native gold is free in small proportions as electrum.

The Calaorco breccia lies parallel to the contact between the Chimu sandstones and the porphyry, with Chimu sandstone dipping gently towards the east, and the porphyry sitting on top (capping). Au Mineralization occurs within the Calaorco breccia and can be found to lie approximately ~700 m length (SE-NW) with a tendency to turn towards the north at depth. The width varies from 100 to 300 m from the contact between sandstone and porphyry. Gold mineralization is most pronounced within the oxide zone, which can extend more than 250 m depth beneath surface.

High grade zones of gold are directly controlled by the intersection of SW-NE faults, which transverse the mineralized trend and are oriented towards the NW-SE (e.g. Tilsa structure). The Tilsa structure has a strike length of approximately 300 m with a grade of 80-100 g/t Au and a variable true thickness of a few centimetres to 1 m. In this zone the Calaroco and Esperanza faults intersect, and form a high grade gold zone (=1 g/t Au) extending towards the north up towards the Central Dyke. Beyond the Central Dyke, Au mineralization drops away slightly.

Cu-Au mineralization is associated with phyllic (quartz-sericite) and potassic (secondary biotite - magnetite-k feldspar) alterations, which is dominated principally by pyrite, chalcopyrite, smaller amounts of bornite, covellite and chalcocite; and some molybdenite.

Mineral zoning from surface downwards is typically no more than 40-50 m for the zone of secondary enrichment (cc + cv +/- copper oxides) and 10-40 m for the mixed zone (cc + cp +/- cv). The primary zone (cp +/- bn), which predominates at La Arena, is normally located at depths in excess of 100 m from surface.

The Cu-Au-(Mo) porphyry at La Arena comprises an elongated ore body 1400 m long (oriented NWSE) by 200-400 m wide, associated with a stockwork in porphyritic andesite intrusive. Mineralization occurs as disseminations along hairline fractures as well as within larger veins. Mineralization extends down to 500 m, with the first 350 m providing the better Cu, Au and Mo grades. Sulfide mineralization consists of pyrite, chalcopyrite and molybdenite, with accessory pyrrhotite, sphalerite, galena, arsenopyrite, marcasite and rutile. In addition, very fine microscopic native gold has been observed (25 microns).

The FPD2 intrusion has the highest Cu-Au mineralization associated to phyllic (quartz sericite) and potassic (secondary biotite, magnetite, K feldspar) with ranges from =0.5 to >1% Cu and ~0.5-1g/t Au respectively. Low Cu-Au mineralization is related to the intra-mineral FPD3 intrusion, which has ranges from 0.1 to <0.5% Cu and <0.2 to<0.5g/t Au.

Cu-Au mineralization is controlled by local N-S faults and transected NW-SE Andean faults; the junction of these two systems generated a jog structure where main FDP2 and intra-mineral FPD3 have intruded.

The La Arena project area contains epithermal style gold mineralization in sandstone-hosted oxidized fractures and breccia, and porphyry Cu-Au (Mo) mineralization. Both styles of mineralization are probably linked because they likely emanate from the same source, namely residual magmatic activity related to an intrusive of intermediate composition.

The mineralization extends over a strike length of 2.2 km south-to-north, a width of 1.1km west toeast and a 1,000m vertical range. Continuity of the mineralization is generally excellent, and improves with lower-grade cut-offs, which is a characteristic of this type of deposit.

Currently, the material is drilled and blasted on 8 m high benches using 155 mm or 171 mm diameter blastholes and a moderate powder factor (0.42 - 0.61 Kg/bcm). Loading of ore and waste is with diesel powered backhoes, face shovels and excavators into 92 t payload rigid frame dump trucks. The ore is then hauled to the dump leach pad and waste is hauled to the waste dump.

The operating experience in the oxide pit has shown a consistent drill penetration rate between ore and waste. In addition, the deeper benches have not shown any changes to the mechanical properties of the rock mass. The unconfined compressive strength (UCS) varies from 60 Mpa in high alteration areas up to 120 Mpa in the bedrock. The average penetration rate is 43 m/h which approximately corresponds to a UCS of 100 Mpa.

The mine is being developed using a conventional load and haul truck open pit mining method. Ore grade control has been considered in the mining method, so proposed mining will be conducted in 8 meter benches to minimize dilution and ore losses. The operative bench height is in the order of 10 meters due to the swell factor applied after the blasting.

La Arena mine operates under an over-trucking model which means that the production will be limited by the loading fleet, not the truck availability.

The running surface on the haulroads of 24 m wide has been designed using three times the truck width following international operational practices and Peruvian safety regulations. Single-lane haulroads of 12-m width were incorporated in the bottom three benches of the pit to maximise ore recovery. The designed haulroads include two 0.5 m drains on each side of the ramp and one additional safety berm.

Due to the lower permeability, oxide intrusive material must be blended with sandstone before it can be processed. A sandstone/intrusive ratio of 4 parts sandstone to 1 part oxide intrusive was determined in order to process the blended material on the leach pads. The blend will be achieved by blending the material on the pad. The oxide intrusive loads will be dumped close to the lift crest to be then “pushed” by a trackless dozer. The ore rock will roll down the lift slope blending it with previously dumped sandstone material.

As the sulfide pit is an extension of the current oxide pit, Rio Alto will continue with the same mining method, operational structure and machinery that are currently utilized for the oxide operation as it represents the best value for the project.

Oxide Process Plant.

Gold is recovered at the La Arena Phase I project via dump leaching. In 2014 ore was mined from two pits; Calaorco and Ethel. Mined material is trucked to pads where it is dumped to form lifts. The lifts are irrigated with sodium cyanide solution. As the solution passes through the lifts gold is dissolved. Pregnant solution discharges from the lifts and flows into a pregnant (gold enriched) solution pond.

Solution is pumped from the pond to an adsorption, desorption and refining (ADR) circuit where gold is recovered onto activated carbon. The carbon is stripped of gold to form a solution and the gold is extracted by the process of electrowinning to form a precipitate.

The precipitate is then dried and mercury evaporated off, mixed with fluxes and smelted to produce doré. The doré is weighed, sampled and shipped to a refinery. The refined gold is then sold.

Slag produced as part of the smelting process is crushed and any ........